An empirical analysis of college enrollment in The Netherlands

In this paper we present empirical results on the demand for university training in the Netherlands. We integrate investment and consumption aspects of education and explicitly take account of the existence of capital market imperfections. The model has been estimated using time-series data. We pay attention to the dynamic structure and the nonlinearity of the functional specification. To a large extent the qualitative effects of the variables suggested by the theory on college enrollment correspond to the results. The effect of tuition on enrollment is not significantly different from zero at the 5 percent level. The elasticity of male enrollment for financial aid is substantial, but the elasticity for per capita income is even higher (close to one). The model allows deriving projections of college enrollment and investigating the impact of government policy.